Bring-Down Certificate - Texas

BRING-DOWN CERTIFICATE — TEXAS

State of Texas — Corporate Closing Documents

PART I: OVERVIEW AND PURPOSE

1.1 What Is a Bring-Down Certificate?

A bring-down certificate is a closing deliverable in which an authorized officer of a party to a transaction certifies that representations, warranties, and covenants made in the underlying agreement remain true and have been performed as of the closing date.

1.2 Texas Corporate Law Framework

Texas business entities are governed by the Texas Business Organizations Code (BOC), which became effective on January 1, 2006, and has applied to all Texas entities since January 1, 2010. The BOC uses a "hub and spoke" organizational structure, with general provisions in Title 1 and entity-specific provisions in separate titles. Key provisions relevant to bring-down certificates include:

• Tex. BOC 3.103 — Officers. Officers of a domestic entity may be elected or appointed as provided in the governing documents or by the governing authority.
• Tex. BOC 4.005 — Certificates and Certified Copies. A certificate issued by the Secretary of State, or a certified copy of a filing instrument, is prima facie evidence of the facts stated in the certificate or instrument. A certificate of status stating that an entity is in existence is conclusive evidence of the entity's existence.
• Tex. BOC 4.007-4.008 — Liability for False Statements. A person who signs or directs the filing of a filing instrument the person knows is materially false, with the intent that the instrument be delivered to the Secretary of State, commits an offense and is liable for damages.
• Tex. BOC 10.001 et seq. — Merger provisions.
• Tex. Tax Code 171.001 et seq. — Texas franchise tax provisions.

1.3 Texas-Specific Closing Considerations

Texas transactions have notable requirements:

• Certificate of Fact — Status. The Texas Secretary of State issues a "Certificate of Fact — Status" confirming an entity's existence and status. This is the Texas equivalent of a certificate of good standing.
• Certificate of Account Status (Comptroller). The Texas Comptroller of Public Accounts issues a "Certificate of Account Status" regarding the entity's franchise tax compliance. This is a separate document from the Secretary of State certificate.
• Franchise Tax Forfeiture. An entity that fails to pay its Texas franchise tax or file its franchise tax report may have its right to transact business forfeited (Tex. Tax Code 171.251 et seq.).

1.4 When Is a Bring-Down Certificate Required?

☐ Mergers and acquisitions involving Texas corporations or LLCs
☐ Equity and debt financing closings
☐ Real estate transactions involving Texas entity sellers
☐ Oil and gas transactions
☐ Joint venture formations
☐ Any transaction where the Agreement requires an officer's certificate as a closing condition

1.5 Legal Effect

• Condition to Closing. Satisfies a condition precedent to the other party's obligation to close.
• Conclusive Evidence. Under Tex. BOC 4.005(d), a certificate of status issued by the Secretary of State stating that a Texas entity is in existence is conclusive evidence of the entity's existence.
• Post-Closing Indemnification. Supports indemnification claims if certified statements prove false.
• False Statement Liability. Under Tex. BOC 4.007-4.008, a person who signs a filing instrument knowing it to be materially false is liable for damages and may be guilty of an offense.
• Franchise Tax Forfeiture. If the Company's right to transact business has been forfeited by the Comptroller for failure to pay franchise taxes, the Company cannot maintain an action in a Texas court (Tex. Tax Code 171.252). Verify status before closing.

PART II: OFFICER'S CERTIFICATE

OFFICER'S CERTIFICATE

Pursuant to Section [____] of the [____] Agreement

STATE OF TEXAS

This Officer's Certificate (this "Certificate") is delivered pursuant to Section [________________________________] of that certain [Stock Purchase Agreement / Asset Purchase Agreement / Agreement and Plan of Merger / Credit Agreement] dated as of [__/__/____] (the "Agreement"), by and among:

Buyer/Lender: [________________________________] ("Buyer")

Seller/Borrower: [________________________________], a Texas [corporation / limited liability company] (the "Company")

Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.

The undersigned, [________________________________], the duly elected and acting [Title] of the Company, hereby certifies, on behalf of the Company and not in any individual capacity, as follows:

Section 1. Organization and Good Standing

The Company is a [corporation duly organized / limited liability company duly formed] and validly existing under the laws of the State of Texas pursuant to the Texas Business Organizations Code. The Company is in existence and in good standing with the Texas Secretary of State. The Company's right to transact business has not been forfeited by the Texas Comptroller of Public Accounts under Tex. Tax Code 171.251 et seq. The Company has filed all required public information reports and franchise tax reports and has paid all franchise taxes due and owing.

Section 2. Representations and Warranties

[SELECT ONE:]

Option A — Full Bring-Down:

Each of the representations and warranties of the Company contained in Article [____] of the Agreement is true and correct in all respects as of the date hereof with the same force and effect as though such representations and warranties had been made on and as of the date hereof, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty was true and correct in all respects as of such earlier date.

Option B — Materiality-Qualified Bring-Down:

Each of the representations and warranties of the Company contained in Article [____] of the Agreement is true and correct in all material respects as of the date hereof with the same force and effect as though such representations and warranties had been made on and as of the date hereof, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty was true and correct in all material respects as of such earlier date.

Option C — MAE-Qualified Bring-Down:

Each of the representations and warranties of the Company contained in Article [____] of the Agreement (disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect) is true and correct as of the date hereof, except (i) to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty was true and correct as of such earlier date, and (ii) where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3. Performance of Covenants

The Company has performed and complied in all material respects with all covenants and agreements required by the Agreement to be performed or complied with by the Company on or before the Closing Date.

Section 4. No Material Adverse Change

Since the date of the Agreement, no event, change, occurrence, circumstance, or condition has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

Section 5. No Legal Impediment

No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction (including any Texas state district court or the United States District Court for any district of Texas), and no statute, rule, regulation, or executive order promulgated or enacted by any governmental authority, is in effect that prevents or prohibits the consummation of the transactions contemplated by the Agreement.

Section 6. No Proceedings

No action, suit, investigation, or proceeding is pending or, to the knowledge of the Company, threatened before any governmental authority (including the Texas Secretary of State, the Texas Comptroller of Public Accounts, or the Texas Attorney General) that seeks to restrain, enjoin, or otherwise prevent the consummation of the transactions contemplated by the Agreement.

Section 7. Franchise Tax Status

The Company has filed all required Texas franchise tax reports (including the Public Information Report) with the Texas Comptroller of Public Accounts. The Company has paid all franchise taxes due and payable under Tex. Tax Code Chapter 171. The Company's right to transact business has not been forfeited or revoked.

Section 8. Exceptions to Certifications

☐ No exceptions to the foregoing certifications exist.

☐ The following exceptions are set forth on Schedule A attached hereto:

[________________________________]

Section 9. Officer Authority

The undersigned is a duly elected and acting officer of the Company, holding the office indicated below, and has been duly authorized by the [Board of Directors / Members / Managers] of the Company to execute and deliver this Certificate on behalf of the Company pursuant to Tex. BOC 3.103.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate as of [__/__/____].

[________________________________]
(Name of Company)

By: ____________________________________
Name: [________________________________]
Title: [________________________________]

PART III: SECRETARY'S CERTIFICATE

SECRETARY'S CERTIFICATE

The undersigned, [________________________________], the duly elected and acting Secretary (or Assistant Secretary) of [________________________________] (the "Company"), a Texas [corporation / limited liability company], hereby certifies, on behalf of the Company and not in any individual capacity, as follows:

Section 1. Incumbency

The following persons are the duly elected or appointed officers of the Company holding the offices set forth opposite their names below, and the signatures set forth opposite their names below are their genuine signatures:

Section 2. Organizational Documents

(a) Attached hereto as Exhibit A is a true, correct, and complete copy of the [Certificate of Formation] of the Company as filed with the Texas Secretary of State, as currently in effect, including all amendments thereto.

(b) Attached hereto as Exhibit B is a true, correct, and complete copy of the [Bylaws / Company Agreement] of the Company, as currently in effect, including all amendments thereto.

[DRAFTER'S NOTE: Under the Texas BOC, the formation document is called a "Certificate of Formation" for all entity types. The internal governance document is "bylaws" for corporations and "company agreement" for LLCs.]

Section 3. Resolutions

Attached hereto as Exhibit C is a true, correct, and complete copy of the resolutions duly adopted by the [Board of Directors / Members / Managers] of the Company authorizing the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby. Such resolutions have not been amended, modified, supplemented, revoked, or rescinded and remain in full force and effect as of the date hereof.

Section 4. Certificate of Fact — Status

Attached hereto as Exhibit D is a Certificate of Fact — Status issued by the Texas Secretary of State, dated not earlier than [____] days before the Closing Date, confirming that the Company is in existence under the laws of Texas.

Section 5. Certificate of Account Status

Attached hereto as Exhibit E is a Certificate of Account Status issued by the Texas Comptroller of Public Accounts, confirming that the Company is in good standing with respect to its franchise tax obligations.

[DRAFTER'S NOTE: The Certificate of Fact — Status (Secretary of State) and the Certificate of Account Status (Comptroller) are separate documents in Texas. Many purchase agreements require both.]

Section 6. Registered Agent

The Company's registered agent, as designated with the Texas Secretary of State pursuant to Tex. BOC 5.201, is:

Name: [________________________________]
Address: [________________________________]

The registered agent information on file with the Secretary of State is current and accurate.

Section 7. Foreign Qualification

The Company is qualified to do business as a foreign [corporation / limited liability company] in good standing in the following jurisdictions:

Section 8. No Dissolution or Termination

No proceedings for the dissolution, winding up, termination, or reorganization of the Company have been commenced or are contemplated. No voluntary termination under Tex. BOC Chapter 11 has been initiated. No assignment for the benefit of creditors has been made.

Section 9. Secretary's Authority

The undersigned is the duly elected and acting Secretary of the Company and has been duly authorized to execute and deliver this Certificate.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate as of [__/__/____].

By: ____________________________________
Name: [________________________________]
Title: Secretary

[COUNTER-CERTIFICATION:]

I, [________________________________], [Title] of the Company, hereby confirm that [________________________________] is the duly elected and acting Secretary of the Company and that the signature above is his/her genuine signature.

By: ____________________________________
Name: [________________________________]
Title: [________________________________]

PART IV: GOOD STANDING CERTIFICATE PROCEDURES — TEXAS

4.1 Important Distinction: Two Separate Certificates

Texas has two separate documents that serve good standing functions:

[DRAFTER'S NOTE: Many purchase agreements require both documents. Review the Agreement carefully. The term "certificate of good standing" is ambiguous in Texas and may refer to either or both.]

4.2 Certificate of Fact — Status — Texas Secretary of State

Issuing Authority

Texas Secretary of State
Corporations Section
P.O. Box 13697
Austin, TX 78711-3697
Phone: (512) 463-5555
Website: https://www.sos.state.tx.us
Online Portal (SOSDirect): https://www.sos.state.tx.us/corp/sosda/index.shtml

How to Obtain

Online (SOSDirect):
☐ Log in to the SOSDirect portal at https://www.sos.state.tx.us/corp/sosda/index.shtml
☐ Under "Order Type," choose "Certificate of Fact — Status"
☐ Enter the SOS file number (or use "Find Entity" to search by business name)
☐ Click "Add Order Item" and complete the purchase
☐ PDF certificate is delivered to your email within approximately 2 hours

By Mail:
☐ Submit written request to the Secretary of State at the address above
☐ Include entity name and SOS file number
☐ Include payment
☐ Processing time: 4 to 5 business days for expedited requests

Fees

What the Certificate Confirms

Under Tex. BOC 4.005, a Certificate of Fact — Status confirms:

☐ The entity's name
☐ That the entity is formed under Texas law (or registered to transact business in Texas)
☐ The entity's date of formation or registration
☐ The entity's current status (in existence, terminated, forfeited, etc.)

A certificate of status stating that a Texas entity is in existence is conclusive evidence of the entity's existence (Tex. BOC 4.005(d)).

[DRAFTER'S NOTE: An entity may be "in existence" with the Secretary of State but have its right to transact business forfeited by the Comptroller for franchise tax noncompliance. The Certificate of Fact — Status may include qualifying phrases to alert the user. Always check the Comptroller separately.]

4.3 Certificate of Account Status — Texas Comptroller of Public Accounts

Issuing Authority

Texas Comptroller of Public Accounts
P.O. Box 13528
Austin, TX 78711-3528
Phone: (800) 252-1381
Website: https://comptroller.texas.gov
Franchise Tax Account Status: https://comptroller.texas.gov/taxes/franchise/coas-instructions.php

How to Obtain

Online:
☐ Visit the Comptroller's Franchise Tax Account Status page
☐ Search for entity using the taxpayer ID number, SOS file number, or entity name
☐ Request the Certificate of Account Status
☐ Certificate is available online upon confirmation of compliance

By Phone:
☐ Contact the Comptroller's office at (800) 252-1381

Fees

Prerequisites for Obtaining Certificate

Before requesting a Certificate of Account Status, ensure:

☐ All franchise tax reports have been filed with the Comptroller
☐ All franchise taxes due have been paid
☐ The entity's Public Information Report is current
☐ No outstanding notices, deficiencies, or delinquencies exist

What the Certificate Confirms

☐ The entity's franchise tax account is in good standing
☐ All franchise tax reports have been filed
☐ All franchise taxes due have been paid
☐ No outstanding tax obligations exist

4.4 Practice Tips for Texas

• Two-Certificate System. Texas has a split system: the Secretary of State confirms entity existence and status, while the Comptroller confirms franchise tax compliance. A corporation can be "in existence" with the SOS but have its right to transact business forfeited by the Comptroller, or vice versa. Check both agencies.
• Franchise Tax Forfeiture. Under Tex. Tax Code 171.251, the Comptroller may forfeit an entity's right to transact business for failure to pay franchise taxes or file franchise tax reports. A forfeited entity cannot maintain an action in a Texas court (Tex. Tax Code 171.252). This is a critical issue for closing diligence.
• SOSDirect Portal. The SOSDirect portal is the primary tool for Texas entity searches and certificate ordering. Entity records can be searched for free. Create an account for fastest service.
• Certificate of Account Status Is Free. Unlike the Secretary of State certificate, the Comptroller's Certificate of Account Status is available at no charge.
• Public Information Report. Texas entities must file an annual Public Information Report along with their franchise tax report. Verify the Company's report is current.
• Registered Agent. Texas requires entities to maintain a registered agent (Tex. BOC 5.201). Confirm the registered agent is current with the Secretary of State.
• Oil and Gas Transactions. Texas transactions frequently involve oil and gas interests. Ensure compliance certificates address any Texas Railroad Commission permits and other energy-related regulatory requirements.

PART V: COMPLIANCE CERTIFICATE — TEXAS

COMPLIANCE CERTIFICATE

The undersigned, [________________________________], the duly elected and acting [Title] of [________________________________] (the "Company"), a Texas [corporation / limited liability company], hereby certifies, on behalf of the Company and not in any individual capacity, as follows:

Section 1. Texas Franchise Tax Compliance

☐ The Company has timely filed all Texas franchise tax reports required to be filed with the Texas Comptroller of Public Accounts under Tex. Tax Code Chapter 171.

☐ The Company has filed all required Public Information Reports with the Comptroller.

☐ The Company has paid all Texas franchise taxes due and payable, except for taxes being contested in good faith for which adequate reserves have been established.

☐ The Company's right to transact business has not been forfeited under Tex. Tax Code 171.251.

☐ There are no outstanding Texas state tax liens against the Company or its assets.

☐ No audit, examination, or investigation by the Texas Comptroller of Public Accounts is pending or, to the knowledge of the Company, threatened.

☐ A Certificate of Account Status from the Comptroller is attached hereto as Exhibit F (or has been separately delivered).

Section 2. Texas Sales Tax Compliance

☐ The Company holds all required sales tax permits from the Texas Comptroller of Public Accounts.

☐ The Company has timely filed all Texas sales and use tax returns and paid all obligations due.

Section 3. Federal Tax Compliance

☐ The Company has timely filed all federal tax returns and reports required to be filed.

☐ The Company has paid all federal taxes due and payable, except for taxes being contested in good faith for which adequate reserves have been established.

☐ There are no outstanding federal tax liens against the Company or its assets.

Section 4. Regulatory Compliance

☐ The Company holds all material licenses, permits, and authorizations necessary for the lawful conduct of its business in Texas.

☐ All such licenses, permits, and authorizations are valid, in full force and effect, and not subject to any pending revocation, suspension, or modification.

☐ The Company is in compliance in all material respects with all applicable Texas statutes, regulations, and orders.

Section 5. Employment Compliance

☐ The Company is in compliance in all material respects with Texas labor and employment laws, including the Texas Payday Law (Tex. Lab. Code Chapter 61) and Texas workers' compensation requirements (Tex. Lab. Code Title 5).

☐ The Company is in compliance with E-Verify requirements as applicable.

[DRAFTER'S NOTE: Texas does not require private employers to participate in E-Verify, but federal contractors and subcontractors may be required to do so. Verify requirements based on the Company's specific situation.]

Section 6. Environmental Compliance

☐ The Company is in compliance in all material respects with all applicable Texas and federal environmental laws, including the Texas Solid Waste Disposal Act (Tex. Health & Safety Code Chapter 361) and the Texas Clean Air Act (Tex. Health & Safety Code Chapter 382).

☐ There are no pending or, to the knowledge of the Company, threatened environmental claims with respect to the Company or its properties in Texas.

Section 7. Railroad Commission Compliance (If Applicable)

☐ The Company holds all required permits and registrations from the Railroad Commission of Texas for oil, gas, or pipeline operations.

☐ The Company is in compliance in all material respects with all applicable Railroad Commission rules and regulations.

☐ There are no outstanding violations, orders, or compliance actions pending before the Railroad Commission with respect to the Company.

[DRAFTER'S NOTE: Include this section only if the Company has oil, gas, or pipeline operations subject to Railroad Commission jurisdiction.]

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate as of [__/__/____].

[________________________________]
(Name of Company)

By: ____________________________________
Name: [________________________________]
Title: [________________________________]

PART VI: BRING-DOWN QUALIFICATION STANDARDS

6.1 The Three Common Standards

Standard A: "True and Correct in All Respects"

• Buyer-favorable. Even minor inaccuracies cause the condition to fail.
• Typically used only for fundamental representations.

Standard B: "True and Correct in All Material Respects"

• Balanced. Most common standard for general representations.

Standard C: "MAE-Qualified"

• Seller-favorable. Only inaccuracies rising to a Material Adverse Effect prevent closing.

6.2 Double-Materiality Scrub

☐ Read through materiality qualifiers (more buyer-favorable)
☐ Preserve materiality qualifiers (more seller-favorable)

6.3 Common MAE Carve-Outs

☐ Changes in general economic or political conditions
☐ Changes affecting the Company's industry generally
☐ Changes in applicable law (including Texas law) or GAAP
☐ Changes resulting from announcement or pendency of the transactions
☐ Changes resulting from actions taken at Buyer's request or with Buyer's consent
☐ Acts of war, terrorism, natural disasters (including hurricanes and severe weather events), or pandemics
☐ Changes in the trading price or volume of the Company's securities
☐ Failure to meet projections or forecasts
☐ Changes in commodity prices (including oil and gas prices)

[DRAFTER'S NOTE: In Texas energy transactions, consider adding commodity price changes as a specific MAE carve-out.]

6.4 Tiered Bring-Down Structure

PART VII: PRACTICE NOTES — TEXAS-SPECIFIC

7.1 Texas-Specific Considerations

• Two-Certificate System. Texas requires separate certificates from the Secretary of State (Certificate of Fact — Status) and the Comptroller of Public Accounts (Certificate of Account Status). An entity can be "in existence" with the SOS but "forfeited" by the Comptroller, or vice versa. Always check both.
• Franchise Tax Forfeiture. Under Tex. Tax Code 171.251, the Comptroller forfeits the entity's right to transact business for failure to file franchise tax reports or pay franchise taxes. Under Tex. Tax Code 171.252, a forfeited entity cannot maintain an action, suit, or proceeding in any court of Texas. This is a critical closing issue.
• BOC Terminology. The Texas BOC uses unique terminology. The formation document for all entity types is a "Certificate of Formation" (not articles of incorporation or articles of organization). The internal governance document for LLCs is a "company agreement" (not operating agreement). The term "termination" is used instead of "dissolution" in some contexts.
• SOSDirect Portal. The SOSDirect portal is the primary tool for entity searches and certificate ordering. PDF certificates are typically delivered to email within approximately 2 hours of ordering.
• Certificate of Account Status Is Free. The Comptroller does not charge for a Certificate of Account Status, making it cost-effective to verify franchise tax compliance.
• Margin Tax. The Texas franchise tax is a "margin tax" based on the entity's total revenue minus certain deductions. It applies to all entities doing business in Texas (not just corporations). Confirm compliance for the specific entity type.
• Oil and Gas Transactions. Texas is a major oil and gas state. Transactions involving oil and gas interests may require additional certifications regarding Railroad Commission compliance, environmental matters, and surface use agreements.
• Successor Liability. In Texas asset purchases, consider whether the buyer may be exposed to successor liability for the seller's franchise tax obligations. The Comptroller may assert liability against the buyer under certain circumstances.

7.2 Timing Considerations

• Certificate of Fact — Status (Online via SOSDirect). PDF delivered within approximately 2 hours ($15).
• Certificate of Fact — Status (Mail/Expedited). 4 to 5 business days.
• Certificate of Account Status (Comptroller). Available online at no charge once compliance is confirmed.
• Pre-Closing Review. Begin preparation at least 5 to 10 business days before the anticipated closing date.

7.3 Bring-Down Certificate Preparation Checklist — Texas

☐ Obtain fully executed Agreement and all amendments
☐ Identify the applicable bring-down standard
☐ Review all representations against current facts
☐ Prepare updated disclosure schedules if needed
☐ Confirm officer authorization via board/member/manager resolutions
☐ Prepare secretary's certificate with incumbency, resolutions, and organizational documents
☐ Order Certificate of Fact — Status from Texas Secretary of State via SOSDirect ($15)
☐ Obtain Certificate of Account Status from Texas Comptroller (free)
☐ Verify franchise tax reports and Public Information Reports are filed and current
☐ Verify registered agent is current (Tex. BOC 5.201)
☐ Confirm no franchise tax forfeiture
☐ For oil and gas transactions: verify Railroad Commission compliance
☐ Obtain foreign qualification good standing certificates for other states
☐ Circulate drafts to opposing counsel
☐ Obtain final approval from certifying officer
☐ Execute and deliver at closing

SOURCES AND REFERENCES

• Texas Business Organizations Code (BOC)
• Tex. BOC 3.005 — Certificate of Formation
• Tex. BOC 3.103 — Officers
• Tex. BOC 4.005 — Certificates and Certified Copies
• Tex. BOC 4.007-4.008 — Liability for False Statements
• Tex. BOC 5.201 — Registered Agent requirements
• Tex. BOC 10.001 et seq. — Mergers
• Tex. Tax Code 171.001 et seq. — Franchise Tax
• Tex. Tax Code 171.251 — Forfeiture of Right to Transact Business
• Tex. Tax Code 171.252 — Effect of Forfeiture
• Texas Secretary of State — Corporations Section: https://www.sos.state.tx.us/corp/
• SOSDirect Portal: https://www.sos.state.tx.us/corp/sosda/index.shtml
• Copies and Certificates Information: https://www.sos.state.tx.us/corp/copies.shtml
• Texas Comptroller of Public Accounts — Franchise Tax: https://comptroller.texas.gov/taxes/franchise/
• Franchise Tax Account Status: https://comptroller.texas.gov/taxes/franchise/coas-instructions.php

This template is provided by ezel.ai for informational purposes only and does not constitute legal advice. Consult a qualified attorney licensed in Texas before using this template.